Venture Investing in Digital Media and Big Data

Catapult to more than double revenue with XOS Technologies deal

“Think of ASX-listed companies with a meaningful market share in the US and stocks like Westfield, Brambles, Computershare and News Corp come to mind.

Catapult Group (CAT, $3.80 trading halt), the homegrown developer of wearable analytic devices for sportspeople and teams, rarely blips on the radar, despite being well known across the global jock fraternity.

Yet the Melbourne-based upstart already has a dominant share of the professional sporting market and is about to be Catapulted further into the big league with today’s $US60m ($80m) acquisition that will more than double revenue overnight.

Catapult is buying the privately-owned Boston based XOS Technologies, which provides video analytic tools to help athletes run faster and leap higher.

In a case of coincidental timing Catapult is also buying Ireland’s Kodaplay (trading as Playertek) for $4.9m.

The latter gives Catapult an entree into the “prosumer” (keen amateur) market to which the company currently has little exposure.

Catapult founder and exec chairman Adir Shiffman says XOS was an obvious pick-up, given the duo already had a partnership arrangement.

The opportunity to buy XOS arose from a complex shareholding structure.

“I think people underestimate the significance of this deal,’’ he says. “There has never been a situation where the two most heavily used elements have been integrated into a single framework.’’

The deals are being funded by a $100m capital raising, one-third via a placement and the remainder through a $32m one-for-10.65 non-renounceable rights offer.

Unusually given Catapult’s current $450m market capitalisation hardly puts it in the ASX big league, Goldman Sachs has agreed to be sole underwriter and lead manager.

Also unusually, Shiffman, CEO Shaun Holthouse and other parties accounting for 61 per cent of the register are not taking up their rights. Shiffman says this has more to do with allowing a bigger allocation for eager punters than any lack of faith in the expansionary gambit.

Catapult received unwanted coverage last year after the Australian Football League tried to punt the company as preferred supplier in favour of the 49 per cent AFL-owned Champion Data.

We gather it’s all hugs and kisses now.

In any event, even before the deal, Catapult derived only 5 per cent of its revenue (a forecast $18-19m for the 2015-16 year) from our shores.

Catapult has signed up at least half the teams in both the US National Football League and National Basketball Association.

The company won a nice free plug last year from Oakland’s Golden State Warriors after the team (including our own Andrew Bogut) won the NBA title.

“Nobody has our expertise across the 1000 elite teams we work for,’’ Shiffman says in an immodest moment.

Similarly immodestly, was that your columnist who rated the stock a buy at $1.58 last September, after the AFL’s embarrassing but inconsequential snub?”